1) (18 points) Bill needs to borrow $50,000 now to pay for some home improvement projects. He would like to pay back the

[answerhappygod]

1 18 Points Bill Needs To Borrow 50 000 Now To Pay For Some Home Improvement Projects He Would Like To Pay Back The 1 (20.88 KiB) Viewed 11 times

1) (18 points) Bill needs to borrow $50,000 now to pay for some home improvement projects. He would like to pay back the loan as a single lump sum amount 5 years from now. American Bank charges 7.5% per year compounded monthly on home improvement loans. Asian Bank charges 7% per year compounded daily on home improvement loans but collects a 2% (of the original loan amount) processing fee upfront. Bill requests the bank to add the fee to the loan amount, i.e., lend him the original amount plus the processing fee. Both banks have agreed to a single lump sum payment at the end of 5 years. Which option should Bill choose and why? Show all work.